Preparing For People to Ask More About Money

In 2024, discussions about pay increases are becoming more open and complex, partly resulting from legislative actions rolling across the country. Attention to pay transparency is changing the dynamics of pay discussions, positioning employees not just as recipients of outcomes but as informed participants in the conversation. In this article, we’ll look at the status of pay transparency laws, other environmental factors, and some industry-specific pay considerations so that you can prepare for compensation conversations.

Cost of Living and Inflation

This year, companies are taking a “nuanced approach,” sticking to their established methods of determining pay. Cost of living is not a primary driver, but some companies are sensitive to making concessions for employees in areas where the cost of living is exceptionally high.

Financial considerations remain at the forefront despite the recent decrease in inflation rates. According to recent reports by PayScale, Gartner, and WorldatWork, expected pay increases are projected to outpace inflation, which suggests a positive trend for real wages. In fact, as of January 2024, The Bureau of Labor Statistics reported wages to be 4.5% higher than the previous year, with prices having risen by 3.1%, leading to a net real wage increase of 1.3%.

Pay Transparency Overview

What is particularly transformative about the current year is the influence of new legislation on pay transparency. Several states have enacted laws, with others poised to follow, that make salary ranges visible to job applicants and require greater disclosure of compensation metrics.

This new level of transparency is expected to steer the focus towards fair and competitive pay practices. Now armed with more information, employees are likely to drive discussions on what truly influences pay increases and question existing compensation strategies more critically.

States that have enacted pay transparency laws:

  • California:California prohibits employers from asking candidates about their salary history and requires disclosing wage ranges for current and open positions.
  • Colorado:Colorado has pay transparency laws in place, emphasizing listing pay ranges on job listings.
  • Connecticut:Connecticut also requires employers to disclose wage or wage ranges to prospective candidates and current employees.
  • Hawaii:Hawaii has enacted pay transparency laws to combat wage gaps.
  • Illinois: Illinois mandates pay transparency, emphasizing disclosure of wage information.
  • Maryland: Maryland requires employers to disclose wage ranges to prospective candidates and current employees.
  • Nevada: Nevada has pay transparency laws in place.
  • New York: New York implemented its pay transparency law in September 2023. NYC has its own Pay Transparency Law, which prohibits employers from asking about an applicant’s salary history and requires them to provide salary ranges for job positions.

Local Legislation:

  • Seattle, Washington: Seattle has a Pay Transparency Ordinance that prohibits employers from asking about an applicant’s wage history or retaliating against employees who discuss their wages.
  • San Francisco, California: San Francisco has a Parity in Pay Ordinance that requires employers to provide equal pay for substantially similar work, regardless of gender, race, or other protected characteristics.

Some Ohio, New York, and New Jersey municipalities have also enacted similar legislation.

Factors Influencing Wage Trends

Macroeconomic considerations can play into the pay conversation.

  • Labor Market Conditions: Tight labor markets (low unemployment) can increase wages as employers compete for talent.
  • Government Policies: Minimum wage laws, tax policies, and labor regulations also play a role. On a federal level, the U.S. Department of Labor (DOL) announced a finalized rule on April 23, 2024, increasing the minimum compensation levels for the so-called “white collar” exemptions to the federal Fair Labor Standards Act’s (FLSA) overtime premium pay requirements. This rule will be phased in on July 21, 2024, and January 25, 2025.
  • Productivity and Profitability: Companies often adjust wages based on productivity gains and financial performance.
  • Industry-Specific Factors: We’ll look next at some recent trends.

Industry-Specific Trends and Insights

The implications of these changes vary significantly across different sectors. For example, the construction industry is expected to see the highest salary increases, potentially up to 6%, as demand for skilled labor continues to outstrip supply. This sector’s robust growth underscores the importance of strategic pay structuring to attract and retain top talent.

Industries like arts, entertainment, recreation, consultancies, and customer service-oriented businesses are also anticipating higher-than-average wage increases. These sectors often face unique challenges in talent acquisition that dynamic compensation strategies can help mitigate.

On the other end of the spectrum, sectors such as government, healthcare, and social assistance agencies predict more modest pay rises, around 4.1%. These areas typically have more rigid pay structures, which can be a disadvantage in a competitive labor market.

Strategic Recommendations for Employers

Like most complex issues, compensation planning requires a multifaceted approach. Here are some thoughts to consider:

  • Adopt Transparency:Embrace pay transparency as a strategic advantage. Transparent practices can enhance trust and engagement among current employees and make your company more attractive to potential hires.
  • Understand Market Trends:Align pay practices with industry-specific trends to ensure competitiveness. This includes offering competitive salaries and considering other compensation elements like bonuses and benefits.
  • Engage in Open Dialogues:Foster an environment where employees feel comfortable discussing compensation. This can help dispel misunderstandings and align employee perceptions with the realities of market conditions and company capabilities.
  • Monitor Legislative Changes:Stay informed about changes in legislation regarding pay transparency to ensure compliance and leverage these changes as opportunities to review and possibly overhaul existing pay structures.


Money Talks

This year may be pivotal for rethinking how pay conversations. With strategic adjustments, companies can comply with new legal requirements and enhance their overall value proposition to employees, thereby securing a competitive edge in the market. This strategic shift is not just about adjusting numbers but about fostering a culture that values transparency and fairness, which are crucial for long-term success in today’s dynamic business environment.